Watchdog: Reader ignores an important letter and finds herself enrolled in a new health insurance plan she doesn’t want

Imagine finding a thick package in the mail, opening it and learning that you’ve been enrolled in a health insurance plan you never signed up for. Worse, the process is legal.

That’s what happened to Pam Ludlow of Georgetown. She’s about to turn 65 and enroll in Medicare. But she wants to buy an alternate Medicare Advantage plan from Humana.

The big package in her mailbox came from BlueCross BlueShield of Texas, her current provider. The package included a welcome note and a membership card. Unknown to her, she was automatically enrolled in BCBS’ new Blue Medicare Advantage plan. Her reaction? She flipped.

What happened? Three months ago, BCBS sent her a one-page letter offering her “a unique service: automatic enrollment” in its new Advantage plan. If Ludlow did nothing, the letter explained, she would be automatically enrolled.

Ludlow was told by a friend to ignore the letter. Bad advice. Case study here of what happens if you fail to read the fine print in letters from companies you do business with. You might fall victim to what I call the opt-out shenanigans.

The great opt-out, opt-in dilemma is a sore spot for The Watchdog. When you have to opt out of something, it means if you do nothing, as Ludlow did, you’re automatically in. Example: “See this big expensive car for sale? If you do nothing, that means you bought it.”

Better and fairer, of course, is the opt-in. You actively sign up for something you want.

Texas’ first solo insurance commissioner, J. Robert Hunter, appointed by Gov. Ann Richards, agrees. “Opt-out is obviously a wrong default position,” he says.

“The consumer is the one who is going to pay the money, and the consumer is the one who should make the decision where to go. The decision shouldn’t be ‘I don’t want it.’ It should be ‘I want it.’”

Ludlow filed a complaint with the Texas Department of Insurance, which is looking into her case. A department spokesman tells The Watchdog that state law provides protections for consumers that prevent a company switching coverage plans without adequate notice to the consumer.

In this case, federal rules appear to allow for an automatic enrollment. The Medicare Managed Care guide labels it a “seamless enrollment.” Someone already enrolled in a health plan with Company A can be switched without direct consent by that company to a Medicare Advantage plan as part of a do-nothing opt-out procedure.

The requirement is that the opt-out informational letter must list a phone number and a mailing address to inform the company of someone’s decision not to enroll. BCBS did that. (Disclosure: BCBS is my health insurance carrier.)

Jarvis says the transition through automatic enrollment “is a commonly used industry practice to avoid disruption of coverage.” Plan members can always get out of a plan before the effective date of a policy, she says.

BCBS has unenrolled Ludlow. She can go where she pleases. But Ludlow is still upset, especially since changing her Medicare records is a hassle. Her enrollment, she fumes, “is totally bogus. It never happened.”

She’s not alone. She recalls that one BCBS phone rep told her, “Many people like yourself aren’t happy.”

My associate at The Watchdog desk, Marina Trahan Martinez, made mystery shopper calls to BCBS to ask, as a consumer would, about automatic enrollment. One rep told her, inaccurately, “You’re not automatically enrolled in anything.”

A second rep said, “Generally, you’re not [automatically enrolled]. This is something that they’re doing, and we did not know about it at first. And I think it’s horrible.” (Score one for corporate candor.)

Beware of the opt-out in other areas. Signing up for free computer software? Make sure you’re not agreeing to change your home page or switch the default search engine in your browser.

Does the product you want to buy on a TV infomercial contain a small-print agreement that locks you into a purchase every month? And have you checked your Facebook privacy settings, built with a confusing combination of both opting out and in?

My least favorite opt-out occurred a few years ago when several North Texas emergency trauma centers were part of a federal medical experiment about blood transfusions. Paramedics were giving some severe shock victims a blood substitute — a saline solution — during early treatment. If you didn’t want to be in the program, you were supposed to wear a bracelet that stated, “Do not enroll.”

Since I prefer real blood in the event of an emergency, I, along with 150 other North Texans, ordered the bracelet. The Watchdog, as I said, has a sore spot for opt-outs.

Staff writer Marina Trahan Martinez contributed to this report.

Coming Sunday: Solving the mystery of the front license plate.

AT A GLANCE: Understanding Medicare options

The Texas Department of Insurance consumer helpline is 1-800-252-3439.

Call 2-1-1 Texas Information, a free statewide service that helps find advocates for seniors. A toll-free alternate is 1-877-541-7905.

The Dallas Area Agency on Aging offers free counseling on Medicare. Call 211 to learn of a nearby benefits counseling site.

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About Dave Lieber

The Dallas Morning News' investigative columnist Dave Lieber focuses on wrongdoing and right-doing in businesses and governments. Known largely for his twice weekly 'Watchdog' column in the Fort Worth Star-Telegram for the past 20 years, Dave brings his brand of investigative energy and what he has dubbed "Watchdog Nation common sense" to a twice-a-week column, appearing Fridays and Sundays.

Aside from creating his WatchdogNation.com consumer rights movement, Dave also created his all-volunteer charity, Summer Santa, which provides assistance for impoverished children in North Texas.

"Dave has one of the most trusted voices in North Texas and our newsroom is honored to have him here," said Bob Mong, editor of The Dallas Morning News. "For 20 years, people in Tarrant County knew they had an advocate, someone in their corner to help them solve problems with business or government. We're lucky to have him, and we think readers across the region will feel likewise."

Lieber won the Will Rogers Humanitarian Award in 2002 from the National Society of Newspaper Columnists, for work that "best exemplifies the high ideals of the beloved philosopher-humorist who used his platform for the benefit of his fellow human beings." Lieber is also a sought-after speaker, appearing in front of more than 100 audiences each year.

"Although I was at the Star-Telegram, I have always admired the newsroom, reputation and writers of the Morning News," said Lieber. "Bob [Mong] shared with me the paper's dedication to consumer support and advocacy, which is why I'm thrilled 'The Watchdog' has a new home up the road on I-30."

About Marina Trahan Martinez

As Watchdog Desk Administrator, Trahan Martinez has served on the front line for readers calling for help and as an ambassador for The News. She began as a reporter in 2000 covering law enforcement, city politics and schools at the Arlington Morning News. Since 2001, she has covered 9/11 aviation issues; the second Bush administration’s Holy Land Foundation asset freeze; and the complexities of shale gas collection for The New York Times. She has assisted The News’ investigative team on its Parkland/UT Southwestern coverage and its Unequal Justice series.